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Undeclared employment and its control in Lithuania

Gediminas Noreika Deputy head of Law division. Undeclared employment and its control in Lithuania. Structure of presentation. Major facts Situation in the area of undeclared employment and control Selection of risky enterprises, planning of the visits Cooperation with other institutions

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Undeclared employment and its control in Lithuania

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  1. Gediminas Noreika Deputy head of Law division Undeclared employment and its control in Lithuania

  2. Structure of presentation Major facts Situation in the area of undeclared employment and control Selection of risky enterprises, planning of the visits Cooperation with other institutions Evidence collection The amount of fines, other punishment mechanisms, appeal process on the imposed fines, outcome results of appeal Courtproceedings, outcome results Key issues and challenges in control and supervision of undeclared work

  3. Major factsaboutLithuania • Official name: • Republic of Lithuania • Area: • 65,200 squarekilometers • Population: • 3,700,000 • Major cities: • Vilnius -the capital city, Kaunas, Klaipėda, Šiauliai, • Panevėžys

  4. Major factsaboutLithuania (2) • Total number of enterprises (companies) - 200,729 • Number of enterprises (companies) in each size category: • 1 – 9 employees - 181 967 • 10 – 49 employees - 14 271 • 50 – 249 employees - 4 016 • > 250 employees - 475 • Total number of employees - 1 110 714 • Total number of self-employed - 167 786

  5. Major factsaboutStateLabourInspectorate • Mission of the State Labour Inspectorate of the Republic of Lithuania – preservation of life, health and employability of employees as well as prevention of infringements of safeguarding employees guarantees in labour relations. • Number of employees – 296 • Number of inspectors – 193 • Inspectors by specialization: • Engineers - 103 • Labor law - 79 • Work hygiene - 11

  6. Economicalcrisisinfluenceon the labour market • illegal work; • constantly delayed payment of wages; • undeclared payment; • minimal or even lower wages; • overtime work or massively organized work during leisure days without pay; • pursuit of economical and commercial profit by disregarding health and security of employees.

  7. Undeclaredwork is: • Work without employment contract or other contract within the framework of the law; • Work in unregistered companies or companies working without special licences; • Work without business certificate or within the framework of the law declared individual practise; • Work in the companies going into outlaw business.

  8. Illegal work is: • LabourCode provides that illegal work shall mean: • the work performed without the conclusion of an employment contract although the characteristics of an employment contract are present; • the employer without reporting of one working day before the start of the work didn‘t notice to the State Social Insurance Fund of the person's body of work began; • performed by foreign citizens and stateless persons failing to comply with the procedure of their employment established by regulatory acts.

  9. Standing groups on illegal work control In 2011, 13 standing groups on illegal work control were set up in the five largest cities to undertake control and prevention of UDW not only within their own counties, but also in the neighboring ones. Detectionof UDW incidents more than doubled in 2011 compared to the previous year.

  10. Public information and awareness-raising campaign TheSLI fundamentally embarked on changing the principles of its activities, placing a greater focus on business consulting, public information and awareness raising. As a result of increased public awareness and a no-tolerance attitude towards UDW, a growing number of alerts from residents on its alleged presence were received by phone and public e-access.

  11. Situation in the area of undeclared employment and control

  12. Situation in the area of undeclared employment and control (2)

  13. Selection of risky enterprises, planning of the visits • In the State Labour Inspectorate is installed a system of risk assessment in 2014. The system helps to identify the riskiest companies.

  14. Selection of risky enterprises, planning of the visits (2)

  15. Cooperation with other institutions • Coordination of UDW control was initiated in Lithuania in 2001: on the 26 November 2001, the Government of the Republic of Lithuania issued a decree ‘On the Coordination of Undeclared Work Control’, delegating the task of coordination to the State LabourInspectorate • Control and prevention of undeclared work by law is delegated to 5 institutions: • State Labour Inspectorate under the Ministry of Social Security and Labour • Financial Crime Investigation Service under the Ministry of the Interior • State Tax Inspectorate under the Ministry of Finance • Police Department under the Ministry of Interior • State Social Insurance Board of Lithuania

  16. Cooperation with other institutions (2)

  17. Cooperation with other institutions (3)

  18. Evidence collection • According to Law on the State Labour Inspectorate of the Republic of Lithuania Inspectors of the State Labour Inspectorate shall have the following rights: • upon presentation of the certificate of employment and authorisation, to enter any work station freely and without prior notification at any time of the day and to inspect the compliance with the requirements laid down in labour laws, standard acts on occupational safety and health or other regulatory acts; • to obtain data and documents (copies, extracts thereof) and other evidence from the employer, which are expedient for execution of the functions of the State Labour Inspectorate; • exercising the prevention and control of violations of laws regulating occupational safety and health as well as labour relations and other regulatory acts, and in the manner not contravening the immunity of private life of persons as guaranteed by relevant laws, to take photos, to make audio and video records; • otherrights.

  19. The amount of fines, other punishment mechanisms, appeal process on the imposed fines, outcome results of appeal • Employersor their authorised persons, who have permitted illegal work to be performed, shall be liable in accordance with the procedure prescribed by laws. • Pursuant to the valid legislation, a fine imposed for every illegally working person may be from LTL 3,000 to 10,000 (EUR 870-2,900). • For a repeated violation, employers or their authorised representatives may be imposed fines from LTL 10,000 to 20,000 (EUR 2,900-5,800). • Cases of undeclaredwork according to the protocols of administrative law violations written by labour inspectors are examined and fines are issued onlyby courts.

  20. The amount of fines, other punishment mechanisms, appeal process on the imposed fines, outcome results of appeal (2) • Work without business certificate or within the framework of the law declared individual practiseshall be punished by a fine of LTL 500 to 1,000 (EUR 145-290). • For a repeated violation may be imposed fines from LTL 1,000 to 2,000 (EUR 290-580)

  21. The amount of fines, other punishment mechanisms, appeal process on the imposed fines, outcome results of appeal (3) • Company who have permitted illegal work of foreigners to be performed shall be punished by a fine LTL 3,000 to 10,000 (EUR 870-2,900) for every illegally working foreigner.For a repeated violation, legal entities may be imposed fines from LTL 10,000 to 20,000 (EUR 2,900-5,800). • Company must pay salary to foreigner who worked undeclared, at least the Government of the Republic of Lithuania the minimum monthly wage and for at least three months, and from this sum to pay the statutory fees. • The State Labour Inspectorate investigates such cases and imposes fines. • Penalties may be imposed no later than within 3 years. • Companies who allowed working undeclared foreigners may be treated in such sanctions: • limitation of participation in public procurement; • the right to receive subsidies, benefits or other state aid, including the European Union's Structural Funds and other support, sentenced to 5 years; • obligation to return some or all of the grants, benefits or other state aid funds within 12 months.

  22. The amount of fines, other punishment mechanisms, appeal process on the imposed fines, outcome results of appeal (3)

  23. Courtproceedings, outcome results

  24. Courtproceedings, outcome results (2)

  25. Key issues and challenges in control and supervision of undeclared work The main measures applied in Lithuania include: coordination of UDW control, standing groups on illegal work control and public information and awareness-raising campaigns. The main characteristic of the systems is cooperation between various institutions responsible for UDW control/labour market regulation. SLI, the main controlling institution for UDW in Lithuania, cannot unrestrictedly access all the databases it needs, especially those related to certain confidential financial information. There are only national government institutions involved in the UDW prevention and control measures in Lithuania, social partners are actually absent from this process.

  26. Thank you for attention

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